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  1. #1
    civfan11 is offline Junior Member
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    Am I required to send a 966 form to the IRS? (I have an LLC in CA,taxed as an s-corp)

    What is the name of your state (only U.S. law)? CA

    I have an LLC in CA, taxed as a s-corp (1120s return)

    I already filed my final return w/ the IRS. I spoke to three IRS agents and nobody informed me about the form 966 until I called back, the fourth agent told me I needed to send in a 966.

    The 966 is due within 30 days from the date you cancel your company and I am late about two months. Do I fill out the form 966 and send it out with my dissolution papers? Is there going to be any penalty for being late?

    Thanks in advance.What is the name of your state (only U.S. law)?
  2. #2
    LdiJ is offline Senior Member
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    Quote Originally Posted by civfan11 View Post
    What is the name of your state (only U.S. law)? CA

    I have an LLC in CA, taxed as a s-corp (1120s return)

    I already filed my final return w/ the IRS. I spoke to three IRS agents and nobody informed me about the form 966 until I called back, the fourth agent told me I needed to send in a 966.

    The 966 is due within 30 days from the date you cancel your company and I am late about two months. Do I fill out the form 966 and send it out with my dissolution papers? Is there going to be any penalty for being late?

    Thanks in advance.What is the name of your state (only U.S. law)?
    When you sent in your final return, did you check the box that said "final return"? If so, that should be sufficient. If not, then you need to send in the form 966.

    I have never seen anyone penalized for sending in a 966 late. However the IRS is imposing all kinds of penalties on 1120S filings that they have not previously imposed.
  3. #3
    civfan11 is offline Junior Member
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    Quote Originally Posted by LdiJ View Post
    When you sent in your final return, did you check the box that said "final return"? If so, that should be sufficient. If not, then you need to send in the form 966.

    I have never seen anyone penalized for sending in a 966 late. However the IRS is imposing all kinds of penalties on 1120S filings that they have not previously imposed.
    Yes I have check marked, "final return." Ok so that should be sufficient then, great thanks. I just didn't know what to do because different agents gave me different answers. I also didn't sent them my dissolution papers w/ my final return...
  4. #4
    civfan11 is offline Junior Member
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    You know what to be safe,if I were to file it late- would you know what the penalty is? or how I can find out what the penalty is?
  5. #5
    davew128 is offline Senior Member
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    Quote Originally Posted by civfan11 View Post
    You know what to be safe,if I were to file it late- would you know what the penalty is? or how I can find out what the penalty is?
    I'm not aware that there is one that is applicable. I once worked with a paralegal who thought he was a tax expert telling me there were all sorts of penalties for not filing this form. So simply to shut his mouth and prove his arrogant behind wrong, I researched the issue and found that there is in fact a penalty and it applies only in certain VERY rare circumstances involving dissolution of a wholly owned corporation by a parent corporation.

    Bottom line, loud mouthed paralegal never challenged my opinion again.
  6. #6
    LdiJ is offline Senior Member
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    Quote Originally Posted by davew128 View Post
    I'm not aware that there is one that is applicable. I once worked with a paralegal who thought he was a tax expert telling me there were all sorts of penalties for not filing this form. So simply to shut his mouth and prove his arrogant behind wrong, I researched the issue and found that there is in fact a penalty and it applies only in certain VERY rare circumstances involving dissolution of a wholly owned corporation by a parent corporation.

    Bottom line, loud mouthed paralegal never challenged my opinion again.
    I have filed at least a half dozen "final returns" 1120s a year for clients, for the last 10 years, and I have never had a single one be asked for a 966...let alone be penalized for not sending one in on time.

    However, I also have to add that up until about 2 years ago S-corps were never penalized for filing late returns, but in the last two years they now charge a monthly penalty, per shareholder, for late 1120s returns. So things ARE changing.

    However I am still confident that if the "final return" box was checked, a 966 is not necessary.
  7. #7
    davew128 is offline Senior Member
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    Quote Originally Posted by LdiJ View Post
    I have filed at least a half dozen "final returns" 1120s a year for clients, for the last 10 years, and I have never had a single one be asked for a 966...let alone be penalized for not sending one in on time.

    However, I also have to add that up until about 2 years ago S-corps were never penalized for filing late returns, but in the last two years they now charge a monthly penalty, per shareholder, for late 1120s returns. So things ARE changing.

    However I am still confident that if the "final return" box was checked, a 966 is not necessary.
    None of which is a "legal" answer. The requirements of Form 966 if nothing else include informational reporting that is not otherwise found on a "final" corporate return. The statutory requirement for the form comes from IRC 6043.

    As far as the penalty goes, it comes from IRC 6652. It IS on the books but if you read 6043 carefully, oddly enough that penalty only applies to dissolutions of exempt organizations and certain recapitalizations. So the fact it, there really isn't a penalty for a dissolving for profit corporation and not filing the form.

    I should add as an addendum to my previous remark, that the issue I had with the paralegal wasn't to do with a dissolving corporation, it was to do with filing the form when there was a greater than 50% change in stock ownership in vague language was a corporate merger. I contended there was no requirement for a mere sale of stock from a former shareholder to a new one, he claimed there was. As usual, the non-attorney's knowledge was greater than the paralegal's.

    I'll also point out that I have been party to corporate dissolutions that DID have a penalty associated with non-filing at least as written into the law.
  8. #8
    civfan11 is offline Junior Member
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    Quote Originally Posted by LdiJ View Post
    However, I also have to add that up until about 2 years ago S-corps were never penalized for filing late returns, but in the last two years they now charge a monthly penalty, per shareholder, for late 1120s returns. So things ARE changing.

    I was hit pretty hard by filing my return 3 months late ($600 late filing penalty that I was personally liable for.) I assumed that I would not be liable because I am filing BK but I was dead wrong. And this is why I wanted to make sure regarding the 966.




    Quote Originally Posted by davew128 View Post

    As far as the penalty goes, it comes from IRC 6652. It IS on the books but if you read 6043 carefully, oddly enough that penalty only applies to dissolutions of exempt organizations and certain recapitalizations. So the fact it, there really isn't a penalty for a dissolving for profit corporation and not filing the form.
    Okay, I found it:
    [url=http://www.taxalmanac.org/index.php/Internal_Revenue_Code:Sec._6043._Liquidating,_etc.,_transactions]TaxAlmanac - A free online tax research resource and community - Internal Revenue Code:Sec. 6043. Liquidating, etc., transactions[/url]

    Dave, so according to 6043... because my LLC is a for profit organization, I do not have to send out 966?

    What about my dissolution papers? I don't need to send that out also right?
  9. #9
    davew128 is offline Senior Member
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    Quote Originally Posted by civfan11 View Post
    Okay, I found it:
    [url=http://www.taxalmanac.org/index.php/Internal_Revenue_Code:Sec._6043._Liquidating,_etc.,_transactions]TaxAlmanac - A free online tax research resource and community - Internal Revenue Code:Sec. 6043. Liquidating, etc., transactions[/url]

    Dave, so according to 6043... because my LLC is a for profit organization, I do not have to send out 966?
    No.....the regulations for 6043 say you do. There's just no statutory authority to impose a penalty for failure to do so.

    What about my dissolution papers? I don't need to send that out also right?
    I've never bothered.

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